Therapies to aid healing of bone wounds and defects are major needs. Recently, small molecules that can induce expression of the bone morphogenetic protein (BMP)-2 gene in osteoblasts and bone marrow (BM) cells have been identified, such as the statins (e.g. lovastatin, simvastatin). However, their use in bone formation is limited due to a lack of suitable delivery vehicles. The long-range goal of this work is to develop optimized delivery devices for tissue engineering. The objective for this application is to determine the effect of different strategies for delivering statins from resorbable polymer scaffolds on bone regeneration in vitro and in vivo: diffusion-controlled delivery of statins, the slow degradation-controlled delivery of OG-PLG, and the continued in vivo stimulation of seeded BM cells to produce native BMP-2 using a novel Osteoinductive Protein Synthesizing Implant System (OPSIS). We have developed the strategy of an OPSIS to combat the problem of poor delivery. This system consists of OG-PLG fabricated into a three-dimensional scaffold using the emulsion freeze-drying (EFD) process, and seeded with BM cells. OG-PLG is synthesized by grafting simvastatin to the end of biodegradable poly[lactide-co-glycolide] (PLG) polymers. Preliminary in vitro studies showed that constant delivery of small amounts of lovastatin (2.5 ug/day) from EFD scaffolds enhanced the efficacy of the drug to form new bone by approximately two orders of magnitude over local subcutaneous injections. However, no bone was found inside the scaffolds because lovastatin is not chemotactic and bone cells were not recruited into the scaffold, and localized cytotoxicity was observed at high doses. Thus, the concept of the OPSIS was developed to continually stimulate BM cells seeded in OG-PLG scaffolds to synthesize native BMP-2 in vivo and stimulate both seeded BM cells and surrounding host cells to form bone. OG-PLG synthesis was confirmed using contact angle measurements, Attenuated Total Reflectance-FTIR and UV-Vis spectroscopy. The hypothesis to be tested is that osteoinduction is enhanced by slow degradation-controlled release of OG-PLG for interaction with seeded BM cells to induce synthesis of BMP-2 in the OPSIS. Two specific aims are proposed: 1) to determine the effects of binding statin onto PLG on osteoinduction in vitro and 2) to determine the effects of binding statin onto PLG and BM cell transnlantation on osteoinduction in vivo. Results will bridge the gap between basic research and clinical application because statins are as potent as the most powerful bone growth factors not yet FDA approved for clinical use and substantially (16,000-fold) cheaper to synthesize, and with an optimized delivery system even large, critical or nonunion defects will be treated effectively and efficiently.